Oanda

Oanda is a financial company that offers a multitude of services, but we will look solely at them from the perspective of examining their retail Forex trading operation.

Oanda does support the MT4 trading platform, but that is common to many brokers for the reason Metatrader 4 offers the most features and flexibility unlike the brokers’ proprietary platforms that are often quite limited, so we will further limit this article to Oanda’s pros and cons as a broker, as well as take a look at their proprietary trading platform, FXTrade.

First off, what some might consider a negative to the extent of eliminating Oanda as a valid choice for a Forex broker: Oanda is a market maker. Without going into elaborate detail of the implications of this, a market maker Forex broker, in order to accommodate traders whose account funds and trade size would not qualify for an account with an Electronic Clearing Network (ECN), take the opposite position in a currency swap to that of their clients.

Market makers are competing against their customers.

This reality has caused some serious issues in the past, but government regulation as well as a motivation on the part of market makers to enhance their reputations to retain and attract clients has pretty much weeded out the bad apples.

Oanda, in particular, is a registered Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) and also belongs to the National Futures Association (NFA).

To be eligible, brokers must conform to specific criteria regarding market capitalization and business practices.

Many new, as well as and experienced traders, appreciate and avail themselves of Oanda’s flexible trade size. Some market maker brokers impose 1000 unit minimum trades, but Oanda permits trades of any size, even one unit.

Trading can be conducted 24 hours a day, five days a week.

Another positive in Oanda’s favor is that all transactions are settled instantly. Some brokers settle at the end of the day, so the broker has the opportunity to wait until exchange rates are more favorable to them.

Oanda also pays interest that is calculated to the second for an open trade. It is worth noting that interest goes both ways. Traders who hold transactions for long periods of time are advised to develop a deep understanding of this facet of trading.

Their spreads are variable, to which some traders might object, but they are very competitive. Currency pairs involving the United States and Australian dollars, the euro and the Japanese yen are typically under two pips. The exceptions are times of high volatility and the moments just prior to economic data releases. A typical spread on the EUR/USD is 1.2 pips. This can swell to 10 pips when news events such as unemployment claims or interest rates announcements are imminent.

Customer service is conducted via chat sessions. In most instances, the wait for an agent is around 15 seconds. The agents do seem to be interested in providing good service and they also seem to be competent. New traders will appreciate their patience.

Oanda’s proprietary trading platform is called FXTrade.

The same exact platform is available for simulated trading and is called FXPractice.

One feature Oanda offers in this regard is that a practice account can be maintained alongside a live account, which is nice for trying out new ideas or strategies, or even for warming up prior to live trading.

The platform is fairly customizable. Users can set up different profiles, save them and switch back and forth between them. Some uses of this feature would be to have one profile with charts in multiple time frames with various indicators applied to one currency pair and another profile with different time frames and indicators for a different pair.

There are enough indicators to keep all but the most technical traders satisfied. They can be applied with either default settings, or they can be customized for such parameters as numerical value and color.

One thing the platform lacks is the ability to enter text on the chart. Anyone who has ever found themselves wondering how some indicator line made it onto a chart and what that line’s significance was can relate to this shortcoming.

Some traders may also object to the fact that Oanda accommodates only market and limit orders, but all traders should be cautioned of the ill-advised nature of revealing their intentions to a market maker, even a reputable one such as Oanda.

Stop losses and take profits can be applied at any time and default values for these can be determined in advance and saved. A stop loss shows up as a red horizontal line and a take profit a green line. It is a simple matter to click on these and drag them to a new position on the chart if desired.

One click trading can be enabled and configured to require order confirmation or allow them to be executed instantly. Order execution is essentially instantaneous, limited only by Internet connection speed.

Perhaps the best feature of FXTrade is that current spreads are constantly displayed and updated on the quote panel next to the chart. When spreads are unfavorable, trading can be avoided, since higher spreads go hand-in-hand with higher volatility and higher risk.

Oanda’s website has a fairly extensive list of tools for learning about trading and placing trades.

One particularly useful tool is a pip/profit calculator that makes pre-determining risk fast and simple. A trader selects a currency pair, inputs the desired number of units along with opening and closing prices and the calculator will show the potential profit or loss prior to any trade execution decision.

There is a section on the website devoted to giving simple yet concise explanations of how various indicators function, along with how to interpret them.

It seems as though Oanda has expended a lot of effort in shedding the bad image some traders have regarding market maker brokers.

It also seems at times that they change things on their platform just to be changing them.

One recent example of this was when they changed a perfectly functional login procedure. The new procedure did not represent any major improvement, but it was just different enough to require conscious thought that would be better preserved for trading decisions.

The platform does seem stable and the Internet connection is robust. Still, everyone knows the value of a backup in the event a connection is lost during a trade. Oanda does have telephone backup for such an event.

There is a mobile version of the platform, so if you are a trader that likes to hold deals for a while, you can monitor your trades from a smart phone or other mobile device without being trapped in an office.

Oanda is probably one of the top three market maker brokers.

Decent spreads, market depth, good customer service and easy to navigate, intuitive trading platform are prime features.

Variable, rather than fixed a spreads and limited order types fall in the minus column.

On balance though, the ability to place trades for as little as one unit makes Oanda a valid choice for a new trader wanting to experience their reactions under live trading conditions, or an experienced trader wanting to test new tactics and strategies on a small scale before committing significant margin.

Contacts

OANDA Corporation
140 Broadway, 46th Floor
New York, NY 10005
USA
Phone: Call +1 212 858 7690 or 1 877 OANDA FX
website: www.oanda.com